Europe rating agency would cost 300 mln euros: report

FRANKFURT (Reuters) - A European credit rating agency that would lower companies' dependence on big rating agencies Standard & Poor's (MHP.N), Moody's (MCO.N) and Fitch (LBCP.PA) would cost about 300 million euros ($424 million) to set up, monthly magazine Capital reported.

It cited Markus Krall, a partner at consultancy Roland Berger, who has been lobbying European governments and companies to gather support and financing for a new agency.

"By the end of 2011, we will have formed a consortium of up to 25 participants, each of whom will invest 10 million euros," the magazine cited Krall as saying in an excerpt of an article to be published on Thursday.

The magazine said the new agency would charge less than half as much for a corporate debt rating than the big three agencies, and fees would be paid by investors rather than the debt issuers.

Last week, Handelsblatt newspaper reported that the head of German Chancellor Angela Merkel's coalition partners in parliament -- Rainer Bruederle -- had put forward a proposal to found a new ratings agency to break the dominance of the big three.

This proposal implicitly backed an initiative led by Roland Berger, Handelsblatt said.

Separately, three people familiar with the matter have told Reuters that there is support from wealthy German families for a different plan to set up a new rating agency based in Switzerland.

They said talks are still at an early stage, though.

The Family Offices that manage wealthy families' assets would be willing to invest several hundred million euros in a new rating agency, one of the people said, but that would not be sufficient to keep the project going in the long run.

Another sticking point is how to ensure that the new agency is independent from politics.

Having a base in Switzerland could create the necessary distance from Berlin, where Germany's federal government has in the past signaled it would support efforts to create a European rating agency, the sources said.

Initially, the new agency would stick to rating corporate debt rather than sovereign debt, they said.

(Reporting by Maria Sheahan and Kathrin Jones. Editing by Jane Merriman)

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